Help me decide what car to buy.

LisaB56

What does it really cost to run a car per year including depreciation? I need a reliable car and don't know whether to buy a nearly new car and replace it regularly or an older car that I run until it isn't worth anything. I can afford to buy outright but I don't have anything to trade in. I am thinking about all the costs, servicing, etc. Are new cars actually cheaper if you factor these in? Single mum and no dad to ask these kind of questions! 

BOWFER

Such a hard one to answer...
You may outright buy a used car and it's totally reliable, then again it might be a pain in the backside and cost you loads.
I can't be bothered by the thought of this, so I decide on a monthly budget and lease or PCP new cars.
It may cost me £XXX per month, but I know that's pretty much my only cost as anything that goes wrong will be covered by the warranty (apart from tyres and bulbs and wipers).
You're even getting free servicing with many new car deals.

Ebe_Scrooge

As above - this kind of decision is always hard.  The fixed costs of a PCP deal make them attractive to a lot of people.  But at the end of the day, you're still paying to drive a brand new car, and you're paying for the depreciation.  And the depreciation in the first 3 years of a car's life is a significant cost.  And you never own the car, unless you pay a big chunk at the end.

Personally, I've always gone for the other approach - buy an older car outright, run it until it becomes uneconomical.  When I sit down and do the sums, it's a vastly cheaper form of motoring when all costs are considered.  Having said that, I'm mechanically-minded enough to (a) be able to spot any major faults when viewing the car and (b) look after servicing and most day-to-day repairs myself.

Yep, the PCP gives you fixed costs, and you would hope a new car would have fewer breakdowns than an 8 year old car (though even that's not guaranteed, and touch wood I've never had any major catastrophes with the cars I've had over the years).  But like I say, over the course of 3 years or whatever, a PCP will cost a lot of money that could have bought you a pretty decent used car outright.  You pays your money and makes your choice.

AdrianC

How long is a piece of string?

How many miles will you cover?
What sort of car?
How expensive will your insurance be?

JGB1955

I would NEVER buy a brand new car...but a pre-registered car, for £2K less - absolutely!  Mine had 5 miles on the clock.  On the understanding that they should never expect to see it again for a service - all sorted (and your local independent garage can do he same (warranted) job for a fraction of the price).

mgfvvc

LisaB56 said:

What does it really cost to run a car per year including depreciation? I need a reliable car and don't know whether to buy a nearly new car and replace it regularly or an older car that I run until it isn't worth anything. I can afford to buy outright but I don't have anything to trade in. I am thinking about all the costs, servicing, etc. Are new cars actually cheaper if you factor these in? Single mum and no dad to ask these kind of questions!

Depreciation is the biggest cost if you buy new. Assuming you buy a £20,000 car new and keep it 3 years it will typically lose more than half its value. £10,000 lost over 3 years works out at £3,000 per year just in depreciation.

In contrast, our main car was bought used at about 3.5 years old for £10,000 and will last us about 10 years, so depreciation costs will be around £1,000 per year. As you can see buying at 3-4 years old and keeping for a significant length of time will typically work out significantly cheaper. There is a slightly higher risk of problems than with a brand new car, but modern cars are mostly pretty reliable and should last 10 years without major issues, so if money is tight an older car might be even cheaper.

Servicing is likely to be between £200 and £500 per year, depending on the car and exactly which service, plus consumables (tyres, brake pads, etc.). Insurance is very dependent on the particular car and your circumstances.

tacpot12

One way to figure out what a car costs to run on average is to look at the HMRC Mileage Rate which is 40p per mile, or £4000 per year if you are driving about 10,000 miles a year. This covers depreciation, insurance, road tax, MOT, repairs, servicing, breakdown cover and fuel.

Newer cars depreciate more, whereas older car cost more to maintain, and can cost more to tax. 

I appreciate that with no-one to guide you, it can be a minefield. The best option is to find a local mechanic or garage where you can have your car serviced cost effectively, and paying them a comission to find your a good car, or pay them to do a pre-purchase inspection of a car you think is good. (Paying them a commission is usually better because they might have to inspect a number of cars before they find one that is actually any good.) 

Our car cost £900 two years ago and has been totally reliable. It's needed a bit more work doing to it that a younger car would have to pass the MOTs, but it has never let us down. (It's a 2005 1.8 Mondeo). So the main thing is that you get lucky when buying the car, and the best way to ensure this is to have an expert inspect the car. It is important to realise that there limits to what can be inspected, but someone who repairs cars should be able to judge the condition of a car much better than anyone who is not in the trade. 

Getting a car serviced at the main dealer is only necessary while it is valuable enough for a dealer service history to materially affect the value of the car. (Once the car is worth less than £5000, I would say that a dealer service history starts to be less worthwhile, and you can and should move to a local independent garage for servicing and repairs). For a while I had cars serviced at the dealer, but if the dealer found any faults (like the brake pads being worn) I would take them to a local mechanic to get them changed. Dealers usually charge £70-100 per hour for labour. So having a newer car, can set you up for expensive service costs, but potentially less repairs. 

If servicing is included in any  PCP deal, you need to be aware that the PCP deal is priced so that the dealership gets their £70-100 per hour for labour. It is never "free" servicing, you are just paying per month so that you don't realise how expensive it is. 

DrEskimo

mgfvvc said:

LisaB56 said:

What does it really cost to run a car per year including depreciation? I need a reliable car and don't know whether to buy a nearly new car and replace it regularly or an older car that I run until it isn't worth anything. I can afford to buy outright but I don't have anything to trade in. I am thinking about all the costs, servicing, etc. Are new cars actually cheaper if you factor these in? Single mum and no dad to ask these kind of questions!

Depreciation is the biggest cost if you buy new. Assuming you buy a £20,000 car new and keep it 3 years it will typically lose more than half its value. £10,000 lost over 3 years works out at £3,000 per year just in depreciation.

In contrast, our main car was bought used at about 3.5 years old for £10,000 and will last us about 10 years, so depreciation costs will be around £1,000 per year. As you can see buying at 3-4 years old and keeping for a significant length of time will typically work out significantly cheaper. There is a slightly higher risk of problems than with a brand new car, but modern cars are mostly pretty reliable and should last 10 years without major issues, so if money is tight an older car might be even cheaper.

Servicing is likely to be between £200 and £500 per year, depending on the car and exactly which service, plus consumables (tyres, brake pads, etc.). Insurance is very dependent on the particular car and your circumstances.

Pretty spot on to the total costs for my partners car she just sold.

Bought 3years old for £11k from main dealer and just sold it to a garage down the road for £3,850 after 8.5yrs. So around £70/month. In that time it had one out of warranty repair for £300, otherwise just standard servicing at a trusted local garage a couple of sets of wheels.

Compared to a brand new lease I reckon the costs would have been around £150-£200/month and the higher servicing costs by having to go through a main dealer would have meant similar maintenance costs too...so around 3 times more expensive.

Only you will know if you value a brand new car on the drive every few years for more than 3x the cost (not to mention all of the contractual obligations you are tied into).

BOWFER

JGB1955 said:

I would NEVER buy a brand new car...but a pre-registered car, for £2K less - absolutely!  

You're maybe missing out though.
Many new car deals are better than used or even pre-registered deals.
Lower APRs, free servicing etc.
Best to check, new might be more attractive.

BOWFER

tacpot12 said:

Our car cost £900 two years ago and has been totally reliable. It's needed a bit more work doing to it that a younger car would have to pass the MOTs, but it has never let us down.

Not that I watch the awful programme, but I believe this is a 'Trigger's broom' argument.

Flight3287462

OP if you have no knowledge of cars, I would aim for a younger car probably with some warranty left.  My plan would then be to run that for as long as possible.

Better the devil you know.

I wouldn't discount a new car as Bowfer said, but spend sometime figuring out where the bargains are.  Good young secondhand cars are in short supply and I suspect that situation won't improve in the short term.